The company confirmed on Monday that Penguin is to be merged into a new joint venture with Bertelsmann-owned rival Random House to create the world's biggest book publisher.

Bertelsmann will own 53% of the newly created group and Random House boss Markus Dohle will be chief executive. Penguin's owner Pearson will retain 47%, with John Makinson, currently chairman and chief executive of Penguin, stepping up as chairman of the joint venture, which will be called Penguin Random House.

Pearson also revealed in an interim management statement on Monday that Penguin revenues shrank 2% in the first nine months of 2012, despite a 35% year-on-year boost in ebook sales in the third quarter.

The company's education operation, which accounts for about 75% of Pearson's business, also reported declining revenues. Pearson's share price was down slightly, by 0.8% or 10p, to £12.21 at 11am on Monday.

Pearson confirmed its full year financial guidance to investors of adjusted earnings per share to be about 84.9p, however, Monday's update revealed that performance across its businesses was mixed.

Overall, Pearson reported flat underlying revenues in the first nine months, as operating profit fell 5% year on year

The company said operating profits were down due to the loss of income from FTSE International. Pearson sold its 50% stake in the index last year.

"We have confidently reiterated our guidance because many of our businesses are going strong in this complicated trading environment," said Dame Majorie Scardino, outgoing chief executive of Pearson. "But the dynamics of the markets we're in could make that achievement more about resilience than flamboyance."

The Pearson-owned Financial Times grew underlying revenues by 7% in the first nine months of the year.

FT Group, which publishes the FT and houses the company's 50% stake in the Economist, said that digital subscriptions to the FT grew 17% year on year in the first nine months to 313,000.

The FT Group as a whole grew underlying revenues by 7% year on year for the period, although Pearson noted that advertising "remains weak and short-term".

Pearson's flagship education businesses, which account for 75% of group revenues, slowed.

North American education revenue fell 3% year on year on an underlying basis, professional education dived 12% and international education grew 6%.

All three education divisions slowed compared to the revenue performance reported in the first six months of the year.

"The fourth quarter is always a key selling season in education and consumer publishing," said Pearson. "We expect market conditions to remain tough, but we believe we can sustain our solid third-quarter trading momentum."

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